Friday May 29, 2015 Search
Weather | Athens
14o C
09o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Draghi vow on ECB action divides economists as growth oicks up

Alessandro Speciale & Andre Tartar

Mario Draghi’s signal that he may act to counter low inflation as soon as next month is dividing economists as the euro-area recovery shows signs of firming.

Nineteen out of 38 responses in the Bloomberg Monthly Survey of economists showed the European Central Bank president will ease monetary policy when officials hold their monthly rate-setting meeting in March, with the same number indicating he’ll stay on hold. While euro-area inflation matched a four- year low in January, the currency bloc’s economy grew faster than expected at the end of last year, according to data released on Feb. 14.

Draghi is trying to support the regional revival against the backdrop of subdued price pressures that threaten to undermine economic activity. Even so, he kept rates unchanged at a record low on Feb. 6 as he cited the “complex picture” of the economy and the “need to get more information” before deciding whether to take action.

“The ECB is probably happy to remain sitting on its hands,” said Duncan de Vries, economist at Nibc Bank NV in The Hague. “The inflation rate is obviously low and is not expected to change significantly in the coming months, but policy makers are expected to look through short-term inflation developments against the background of slightly improving economic growth momentum.”

Euro-area gross domestic product expanded 0.3 percent in the last three months of 2013, beating a median estimate of 0.2 percent by economists in a separate Bloomberg survey and improving on 0.1 percent in the previous quarter.

Germany and France, the region’s biggest economies, both had faster growth than predicted. Italy, the third-largest, posted an expansion for the first time in more than two years. Dutch GDP climbed more than twice as much as estimated and Portugal’s economy grew for a third quarter.

Even so, inflation in the 18-nation euro area slowed to 0.7 percent last month, less than half the ECB’s goal of just below 2 percent. The number matched the level in October that helped prompt an unexpected November rate cut.

The European Union’s statistics office in Luxembourg releases this month’s preliminary consumer price index on Feb. 28. The ECB will publish its updated internal projections on March 6 for inflation, for the first time extending the forecasting horizon to 2016.

Draghi has “very much kept the door open to future action -- and as soon as March,” said Howard Archer, chief U.K. & European economist at IHS Global Insight in London. “If the ECB staff forecasts show euro-zone consumer price inflation still clearly below 2 percent in 2016, the Governing Council may very well feel that this is the trigger to enact further stimulus.”

Among the economists who predicted action by the ECB at its March 6 meeting, the most probable decisions were seen as a cut in the benchmark rate or an end to the sterilization of crisis- era bond purchases. The ECB’s key rate is at 0.25 percent, leaving little room for further reductions.

Less-likely policies were seen as a new offer of long-term loans to banks, a negative deposit rate, a reduction in the reserve requirement, changes to the collateral framework for banks, or asset purchases by the ECB.

Almost 60 percent of the economists in the Bloomberg survey said the ECB will look past a drop in the headline inflation number if core inflation, which excludes food and energy, holds steady or rises.

Draghi said on Feb. 6 that the January slowdown “was mainly due to energy price developments,” while medium-term inflation expectations remained “firmly anchored” and price gains will gradually rise toward the bank’s target.

“Action is in our view dependent on a further decrease of euro-zone inflation,” said Christopher Matthies, economist at Sparkasse Suedholstein in Neumuenster, Germany. “We don’t expect a significant downward revision of the ECB’s staff inflation outlook in March and don’t consider action likely. But of course this is far away from being a safe bet.”

[Bloomberg]

ekathimerini.com , Monday February 17, 2014 (09:20)  
Hoteliers seek VAT solutions
Chaos in the system for tax declarations
Lenders’ first-quarter data suffer from NPL expansion
Regional airport concession deal ‘to be sealed soon’
PM speaks to Merkel, Hollande as lenders increase pressure
With negotiations between Greece and its creditors at a critical phase, Prime Minister Alexis Tsipras on Thursday sought the assistance of German Chancellor Angela Merkel and French Presiden...
To Potami and PASOK poised to support deal
To Potami leader Stavros Theodorakis said Thursday that his party would back any agreement between the government and the institutions, while PASOK chief Evangelos Venizelos suggested that P...
Inside News
SOCCER
Panathinaikos conquers PAOK through Tavlaridis goal
A Stathis Tavlaridis goal has brought Panathinaikos to practically within one point from clinching a spot in next season’s Champions League qualifiers, as the Greens made it three out of thr...
SOCCER
AEK Athens returns to top league after financial collapse
Greek club AEK Athens has just returned to the country's top soccer league, two years after financial collapse sent it to a lower league. One of the country's largest clubs, AEK sealed its s...
Inside Sports
COMMENTARY
FIFA and fair play
Greeks must be among the less excited observers of the ferocious crackdown on the highest echelons of global soccer’s administrative body, FIFA: from the lowest leagues to our top teams, fro...
COMMENTARY
Greece´s Cuban pathway to a parallel currency
The idea of a parallel currency for Greece is worthy of consideration, with even German Finance Minister Wolfgang Schaeuble broaching the possibility as Greece fails to reach an agreement wi...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. Hoteliers seek VAT solutions
2. Chaos in the system for tax declarations
3. Lenders’ first-quarter data suffer from NPL expansion
4. Regional airport concession deal ‘to be sealed soon’
5. PM speaks to Merkel, Hollande as lenders increase pressure
6. To Potami and PASOK poised to support deal
more news
Today
This Week
1. Endless confusion and worry
2. G-7 weighs in on Greece as Tsipras government told to be serious
3. ECB's Nowotny says no to loosening funding for Greece now
4. Lagarde says still much work to do in Greek debt talks
5. Greek bank losses show predicament amid record outflows
6. Following up on a positive step
Today
This Week
1. Hotel contracts with a ‘Greek default clause’
2. Neither Grexit nor a dual currency will solve Greece’s problems
3. Some 300 mln left banks on Tuesday
4. No more 'quick and dirty' fixes for Greece
5. Romantic notions meet reality
6. Tsipras faces down radicals within SYRIZA over terms of deal
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2015, H KAΘHMEPINH All Rights Reserved.